You will need a new vocabulary if you are going to keep up with solicitors and estate agents. This is the most commonly used jargon you will come across when buying.
Capital Gains Tax (CGT)
Tax that is payable on profits from the sale of certain assets such as property, any profit from the sale of your main residence is likely to be exempt from CGT, but you may pay CGT if you sell a second home or a home that you have been letting.
Completion
The day when the seller receives the money from the sale and the legal ownership passes to the buyer.
Contract
Sets out the terms on which the property is sold, including the price. The buyer and seller each sign a copy and these are exchanged to form a binding contract.
Early Repayment Charge
If you repay your mortgage during the period of, for example, a fixed or discounted rate, or switch mortgage providers when you have one of these rates, your lender may make an Early Repayment Charge. This can be substantial; you should read and understand the terms and conditions before you sign up for one of these rates.
Exchange
The contracts signed by the buyer and the seller are physically exchanged and a date is set for completion. On exchange, the buyer pays the deposit, usually around 10 per cent of the price.
Freehold
The ownership of a property and the land it stands on.
Gazumping
The buyer's nightmare. After you have agreed a price for the property, the seller accepts a higher offer from another buyer.
Ground rent
If you own a leasehold property you will normally have to pay a small annual ground rent to a freeholder.
Land Registry
The government body that records land ownership in England and Wales and transfers ownership from one person to another.
Loan-to-Value (LTV)
The amount of a mortgage as a percentage of the lower of the purchase price or bank's valuation. For example, if your mortgage is £100,000, the purchase value is £149,000 and the bank's valuation is £150,000, the Loan-to-Value is £100,000 divided by £149,000, then multiplied by 100=67.1 per cent.
Higher Lending Charge
An insurance a lender takes out for their own benefit which you may be required to pay for when you ask for a mortgage above a set Loan-to-Value (LTV), usually 75 per cent or 80 per cent. If you default on your mortgage and are unable to repay it from other money or assets or from the sales proceeds, the lender may subsequently claim on the insurer. Some lenders will pay the Higher Lending Charge on your behalf, usually up to a maximum LTV of 90 per cent.
Stamp duty
A Government tax the buyer pays. A one per cent tax is levied on properties costing over £125,000 rising to three per cent for properties above £250,000 and four per cent above £500,000.
Title deeds
These show who owns the property and give general details of any other legal matters, such as restrictions in use of the property and rights of way.
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